Marcus Corp (MCS) 2026 Q3 法說會逐字稿

Good morning everyone and welcome to Marcus Corporation's third quarter 2026 earnings conference call. My name is Jonathan and I will be your operator for today. (Operator Instructions) As a reminder, this conference is being recorded.

Joining us today are Greg Marcus, Chairman, President, and Chief Executive Officer; and Chad Paris, Chief Financial Officer and Treasurer of the Marcus Corporation. At this time, I would like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.

2026 third quarter conference call. I need to begin by stating that we plan to make a number of forward-looking statements on our call today, which may be identified by our use of words such as believe, anticipate, expect or other similar words.

Our forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected or projected in our forward-looking statements. These statements are only made as of the date of this conference call, and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

The risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward-looking statements, are included under the heading Forward Looking Statements in the press release we issued this morning announcing our fiscal 2026 third quarter results and in the Risk Factors section of our fiscal 2025 annual report on Form 10-K, which you can access on the SEC's website.

Additionally, we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP financial measure, in evaluating our performance and its limitations. A copy of which is available on the Investor Relations page of our website at investors.marcuscorp.com.

All right, with that behind us, let's begin. I'll start this morning by spending a few minutes sharing the results from our third quarter and then discuss our balance sheet, liquidity, and capital allocation. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead. We'll then open up the call for questions.

This morning, we reported another record quarter with results that exceeded our expectations and broke third quarter revenue records in both divisions. In theaters, a strong film slate led by deep into the summer to deliver the highest total revenue for the summer movie season in Marcus Theater's history.

In hotels, we continued to see strength in leisure demand during our seasonally busiest quarter that drove record third quarter revenue. The record third quarter revenue in both divisions combined to deliver the highest quarterly revenue for any quarter in company history.

I'll start with a few highlights from our consolidated results for the third quarter of 2026. Consolidated revenues of $238 million were up 13.1% compared to the prior year quarter. Operating income for the quarter was $30.3 million, an increase of $7.6 million or 33% to the prior year quarter. Adjusted EBITDA for the third quarter was $49.1 million, a 21% increase over the third quarter of fiscal 2025.

And net earnings for the quarter were $18.8 million or $0.60 per share or $13.2 million or $0.42 per share, excluding the impact of a non-recurring gain on property insurance settlement of $3 million or $0.10 per share net of tax.

Turning to our segment results, I'll begin this morning with our theater division. Third quarter 2026 total revenue of $145 million increased approximately 21% compared to the prior year third quarter, primarily due to the strong performances from Spider-Man: Brand New Day and The Odyssey as well as stronger carryover of films that released in the comparable theater admission revenue for the third quarter and comparable theater attendance increased 16.8% compared with the third quarter last year.

Based on data from Comscore, US box office receipts increased 27% during the 2026 third quarter compared to US box office receipts during the third quarter of 2025. There are three factors that impacted our admissions revenue growth when compared to the reported national box office data, it is important to note that our admissions revenue in the third quarter of 2025 included box office revenues from two films with national grosses that were not reported by certain streaming content providers to Comscore. The exclusion of the grosses for these films from the price office growth and our admission revenue growth raised percentage points when compared to the national box office.

During the third quarter of 2026, we made the strategic decision to not play two films due to distributor terms, which we believe -- negatively one percentage point. While these decisions led to achieving competitive market terms for film rent, revenue for the third quarter grew 25.6% in the industry by approximately 1.4 percentage points.

We believe that our slightly lower box office performance relative to the nation during the third quarter was primarily attributable to an unfavorable film mix that included the number two film in the quarter, The Odyssey, that played stronger in other parts of the US where we do not have a presence and in premium formats with significantly elevated average ticket prices.

Our average admission price increased 4.3% during the third quarter of 2026 compared to last year. Our admission per caps were favorably impacted by strategic pricing changes, a higher percentage of our attendance on PLF screens. And a decrease in the percentage of attendance coming on Value Tuesday compared to last year's quarter due to one this year's calendar third quarter compared to this year's third quarter.

We also grew our average concession, food and beverage revenues per person at our comparable theaters, which increased by 3.8% during the third quarter of 2026 compared to less -- in movie-themed merchandise sales and menu pricing.

Our top 10 films in the quarter represented approximately 80% of the box office compared to 72% for the top 10 films in the third quarter last year. The more concentrated film slate weighted towards blockbuster films compared to the less concentrated slate in the third quarter last year resulted in a less than 1 percentage point increase in overall film cost as a percentage of admission revenues.

Finally, theater division adjusted EBITDA during the third quarter of 2026 was $46.3 million, an over 46% increase over the prior year quarter, primarily due to the higher attendance volumes.

Turning to our Hotels & Resorts division, total revenues before cost reimbursements were $82 million for the third quarter of 2026, a 2% increase compared to the prior year. RevPAR for our owned hotel portfolio increased 2.1% during the third quarter compared to the prior year, which resulted from a 3.3% increase in our average daily rate or ADR, partially offset by an overall occupancy rate decrease of just less than 1 percentage point.

Our average occupancy rate for our owned hotels was 77.5% during the third quarter of 2026, which excludes the Marc Hotel that opened in early to competitive set, RevPAR grew 7 points from -- Smith Travel Research, comparable to a competitive hotel of 6.2% for the third quarter of 2020, indicating that our hotels outperformed their competitive set. We believe our outperformance resulted primarily from strong transient demand and slightly improved business travel, while we experienced a somewhat softer percentage of our total business mix was approximately 39% compared to 43% in the third quarter last year.

When comparing our RevPAR results to comparable upper upscale hotels throughout the United States, the upper upscale segment experienced an increase in RevPAR of 7.8% during the third quarter compared to the third quarter last year, indicating that our hotels underperformed the industry by approximately 5.7%.

We believe our quarter primarily relates to transient demand related to major events, particularly the World Cup that occurred in other markets where we do not have a presence, as well as softer group demand in our markets.

With the softness in Group business and honestly, with food and beverage revenues down 1.4% in the third quarter of 2026 compared to the first quarter -- hotels adjusted EBITDA decreased $600,000 by increased repair and cleanup in the prior year quarter and was negatively impacting our Resort & Spa, which occurred on July 3.

While our team worked incredibly hard to recover and serve resort guests that weekend, business cumulatations, all [horse] closures and incremental token up and repair expenses be covered by property insurance -- negative impact on adjusted EBITDA due to the weekend.

When excluding the impact of the storm, our adjusted EBITDA was essentially flat compared to the prior year was also negatively impacted in projects compared to when those projects were in fiscal 2020 and quarterly shifts and timing of annual maintenance projects.

Our cash flow from operations was $38.4 million in the third quarter of 2026 compared to cash flow from operations of 39% -- slight decrease in cash flow, primarily due to -- total capital expenditures during the third quarter of 2026 were $10 million in 2025.

With CapEx in the quarter, our capital expenditures for the year are progressing expenditures for fiscal 2026 of $45 million to $50 million. The timing of the third quarter was approximately $60 million in capital, with debt to capitalization leverage of 0.8 times.

We are well positioned with a very strong pursuing growth investment in our returning capital share. We continue to allocate capital with a balanced approach that supports assets, pursuing shorter-term payback returns and investments in our law.

I'll now turn the call over to Greg.

As we shared with you on our last quarter and with the film slayed ahead of us, we saw the what's played out since our last update has been truly historic. In our Theater division, a robustness has kept moviegoers coming back to our theaters deep into the summer.

In our Hotels and Resorts division. Strong leisure travel, supported the steady trend of average daily rate, and RevPAR growth that we've seen only surprises that we had to navigate in the quarter. Our team responded at the highest quarterly revenue in our company's history and the quarter in which both of our businesses achieved their highest third-quarter revenue ever.

I'll start with our theater division. And as this quarter wrapped up the summer moviegoing season, which runs from the first Friday in May through Labor Day, I would like to begin with some perspectives on just how strong this summer was, as this was one for the history books.

For the season, with our highest attendance since 2019, Marcus Theaters recorded its highest box office, concessions, food and beverage, and merchandise sales. We also set new records for both per capita admissions revenue and per capita concession merchandise and food and beverage spend for the summer moviegoing season.

As an industry, we saw four consecutive months from May through August that each topped $1 billion in domestic box office, and the sustained performance only happens when we have a deep film slate that gives audiences a reason to return week after week.

In the third quarter, we had a strong carryover of films that opened in the second quarter, combined with two blockbuster films, Spiderman: Brand New Day and The Odyssey, that broke opening weekend records, and more importantly, held strong week after week deep into the summer. When you combine these massive [tent poles] with such a diverse array of counter programming, you get a theatrical ecosystem firing on all cylinders.

Beyond the blockbuster films, we also had a more balanced slate that included family films such as Minions and Monsters, Moana, and strong carryover from Toy Story 5 that played well in our markets. Horror continues to draw audiences with Resident Evil making a meaningful contribution to the third quarter. Not only did the top films perform better this quarter than last year, but we had more movies with 32 wide releases compared to 30 in the quarter last year.

Chad discussed the puts and takes that made comparisons to the reported national box office growth a bit more challenging this quarter, but when you cut the noise and look at the numbers on an apples-to-apples basis.

There were really two things that drove our underperformance to the national box office growth. First, we intentionally passed a couple of smaller films this quarter as we work to achieve competitive film terms as a distributor. While we never like to do this -- was a strategic decision as we are committed to controlling our costs at sustainable levels for the long-term. This ability to make decisions for the long-term is just another example of the benefits of our strong balance sheet.

Second, the number two film in the quarter, The Odyssey played stronger in other regions of the country, particularly the West Coast where we do not have a presence. Exhibitors in these markets were also realizing significantly elevated ticket prices, particularly with 70-millimeter showings of the film around the clock.

While we achieved solid market share within our markets and also had a couple of 70-millimeter prints of the film, the film did disproportionately well outside of our markets. Conversely, I want to highlight that we did very well with the biggest film of the quarter, Spider-Man: Brand New Day, which played on all of our PLF screens immediately on opening weekend, with PLF showings representing 49% of the box office over the entirety of its run.

We believe that on a relative basis, we have the highest percentage of PLF penetration in the industry, allowing us to take advantage of times just like this.

Looking ahead, the fourth quarter is off to a good start with a solid domestic box office growth in October and a few positive surprises, including You Can See Everything. The holiday film slate ahead features the highly anticipated Avengers: Doomsday and Dune parts fully strong.

Beyond these [tentpoles], the fourth quarter slate includes several other exciting films, including The Cat in the Hat, Godzilla Minus Zero, Focker-in-Law, Hexed, and Jumanji: Open World. Further ahead, the 2027 film slate also looks strong with major franchises including Shrek 5, Star Wars: Starfighter, Minecraft 2, Frozen 3, Sonic the Hedgehog 4, Spider-Man: Beyond the Spider-Verse, Man of Tomorrow, The Legend of Zelda, Avengers Secret Wars, and many more. There are many more great films coming noted in today's release.

In summary, we are thrilled with the year that has taken shape for our theater business. More importantly, this isn't just a post-pandemic recovery anymore. This is a recognition of the importance of the theatrical model to the overall content ecosystem. We see more opportunity from new sources and theatrical windows experiences with huge hits and others, if not as many. We see trends as very positive, and we like where things are headed.

Moving to our Hotel and Resorts division, you've seen the segment numbers and Chad shared some additional detail on the performance metrics, including our outperformance to the competitive sets. Once again, the Hotel division achieved record third quarter revenue for the third consecutive year, and we were able to successfully navigate a few challenges along the way.

There were several notable items in the quarter that I'd like to highlight. At a high level, for our overall portfolio, rooms demand in the quarter remained steady and the overall travel environment appears to remain healthy.

However, the dynamics continue to vary by market and there was some shift in our business mix compared with last year's quarter. In some markets, notably Chicago, we saw strength and higher demand due to an increase in the number of citywide events and convention business that drove very high occupancy in rates.

This contrasts with our Milwaukee market, where we saw some softness in group business with a weaker citywide event schedule compared with last year. This resulted in some group room blocks not selling out, percentage of our rooms revenue, with stronger transient leisure and business travel growing as a percentage of our rooms mix. Well, this tends to help with average in beverage revenue tied to the decrease in banquet and catering business for group events.

RevPAR grew at six of our seven comparable hotels during the second quarter compared to the prior quarter, with both occupancy and average daily rate growing at five of our seven comparable hotels.

As Chad mentioned, early in the third quarter, we navigated through the impact of a major severe storm event that hit our Grand Geneva property in July. I'm truly grateful that all of our associates and guests were safe and there were no major injuries from the storm, which was truly remarkable in light of the sudden approach of the storm, high winds and debris, and damage to the golf course.

July 3 timing of the storm was especially challenging during what is always a busy holiday weekend, and I'm incredibly proud of the hard work and dedication of our associates to recover from the storm and continue to serve guests. While we were able to mitigate the revenue impact to the week following the storm, it did create a revenue and expense headwind in the quarter.

Looking ahead, the fourth quarter in hotels is off to a strong start in October, and we've been from the Milwaukee Brewers run to the World Series. As a lifelong Brewers fan, we were excited and proud to host visiting and fans, international media, and many Brewers VIPs to our hotels during this historic postseason.

Group bookings for the rest of the year look stable. With our group room revenue bookings for 2026, our group pace in the year, for the year, running approximately 5% of where we were this year, looking a bit further ahead of 2027. Group room pace is running approximately 10% ahead of where we were at this time last year for the next year out. Although this far out, the timing of bookings can vary significantly.

Banquet and catering pace for the remainder of 2026 is running in line with where we were at last year at this time, approximately 14% ahead for 2027.

Overall, the division had another good quarter, the current state of our hotel business remains stable and on track with our expectations for the year. Volatility and key travel costs, including high gas prices and rising airfares have persisted. If market conditions change and we begin to see softness, we are prepared to react and adjust quickly.

Finally, I'd like to close with a brief comment on our balance sheet. We continue to remain on track to deliver very strong free cash flow in 2026, and we're building cash in our balance sheet as [dry powder] for future growth investments.

We are disciplined and patient when evaluating growth investments, and we continue to look for opportunities to deploy capital to grow both of our businesses with value-accretive investments.

Our strong balance sheet allows us to move quickly when we see good opportunities and we have a history of executing when they arise. And again, I want to add my congratulations to the Milwaukee Brewers, the World Champions, the winners of the World Series last night in Tampa.

Not only is it exciting for the city and for everyone involved with the team and it is exciting for our entire community and for our company because it reflects so well on Milwaukee where we have significant investments. We are in the press around the world and that can't help but be beneficial to our community and to our company.

Before we open up the call for questions, I want to conclude my remarks by saying thank you to all the hardworking associates of the Marcus Corporation. I especially want to thank our associates at Grand Geneva that worked so hard on a holiday weekend to recover from some great hospitality. I don't want to ever take for granted what each and every one of them does to contribute to the success of both of our businesses.

With that at this time, Chad and I would be happy to open the call up for any questions you may have.

(Operator Instructions)

Eric Wold, Texas Capital Bank.

Thanks. Good morning and congrats on the brewers. A couple of questions, I guess, one on each segment, I guess, if you think about the theater segment and kind of the pricing environment, I know it comes up a lot given the consumer environment around kind of the tough economy, how aggressive are you being in this environment in terms of kind of baseline ticket prices.

Seeing any signs of resistance and kind of what were your thoughts kind of early into kind of how that could play out over the next few quarters?

You hit a hop on issue for me, Eric. It is something that we watch very carefully. We are at market with our pricing. We watch what the market is doing. But what we want is movie going to be a habitual experience. It's a momentum business. It's going back regularly. And for that to happen, it has to be an affordable experience and night out.

And it remains so. Not only do we benchmark across, we look at all the different costs. We look at the costs, what people are charging to go to other movie theaters. We look at what people are charging to go to other out-of-home event-based experiences, which obviously are much higher than going to the movies, but we also watch the price of streaming, which has been going up.

So, we're comfortable with where we are. We believe that we also offer ourselves a variety of price points. So, the customer that wants that premium first night experience and a PLF, well, we have, [DLFs] as you know.

But yet our Tuesday is extremely and remains extremely robust where we're offering the value customer, value pricing at the concession stands as well as the box office. And so we just -- I would tell you we're probably not going to lead on raising the prices as high as we can, but we're probably also not going to leave money on the table either.

Got it. Helpful. And then on the hotel segment, I know you've recently completed the major renovations, the Pfister a couple of years ago, the Hilton, and then obviously adding the short haul course to Grand Geneva. You talked about kind of leaving your balances strong and look at other return-generating investments. How much more room do you have, do you think, in the hotel segment with existing properties to make renovation or changes that would have a decent-sized return in terms of small additions or changes you have yet to make at the properties?

Hey, Eric, I'll take that one. We have a lot of room. And for us, it's really more about finding opportunities that have the return. And so we're looking for really special assets when we do something new and acquire an asset.

And we're also looking at doing more of the joint venture type of structures as we make new investments so that we can deploy smaller chunks of capital into more opportunities and achieve some diversity in the markets that we participate in.

But we have a lot of room to do there. As you point out, our core assets, the three that we recently renovated are all in really great condition. We're seeing very good uplift from those renovations and the returns are playing out generally in line as we expected.

And so we'll be thoughtful as other renovations come up at other properties over the next several years, there's always a cycle. We don't have anything major that's imminent like we just went through, but within the guidance on CapEx that we provide, there's always some level of refresh that's happening and we're keeping our assets in good condition.

I'd also add, specific to the Grand Geneva, that is an asset that we're actually right in the middle of, we're just beginning planning exercise there to look how to really maximize what we have there. It is a really special asset that we've taken great care of and made investments along for further really good ROI investments property that we know, market that we know, with land that we own. It's a pretty good combination. So I think there'll be some you'll hear more in the future about opportunity we have there as well.

Patrick Sholl, Barrington Research.

Hi, thank you and congrats on the Brewers. On the theater segment, could you maybe talk about like the mix of attendees and versus like loyalty members versus people that weren't in the program and like when you get a surge of attendance.

I guess any sort of like success in like onboarding them onto the loyalty program to help like improve maybe your ability to reach them in the future and just kind of just the broader retraining of the consumer and how any sort of like progress you're kind of seeing on that process with the longer, more established windows?

Yes, I can take the first part of that question just on loyalty and I'll wrap into that our Movie Club subscription program. In the quarter, we did see a pretty meaningful uptick in loyalty members. And I think that happens in any quarter when you have as robust of a slate that brings people out to the theaters who maybe haven't been there in a while and so that was encouraging to see.

We also had an uptick in the percentage of our attendance with movie club redemptions and that's expected. You have customers who are earning credits every month, they may not be going every month and so when we have a robust slate, you see a higher uptick in those redemptions.

And we think that's a good thing, we're seeing people use the program and it makes it more sticky and they'll stay in the program longer and reduce churn in the program, which has our experience has been that we are on a net basis, we are -- I would say slowly and steadily growing that program. We did not see a giant uptick in ups in the quarter, but it's been more slow and steady progress and that's in line with what we expect and we have continued goals for that next year.

Pat, can you repeat the second part of the question?

Yes, the second part was just on, I think you guys had talked about like kind of retraining the consumer to not wait for it to be for a movie to be available on streaming and just kind of just more about that process with the significant increase in like the number of films in the quarter and just the more solidity in the window.

I just think that's something that's going to take time as we go along and the consumer starts to realize it's not available. The thing that we found the most challenging, I think, of all of the -- is the there's two challenges with it. The most is that this idea of film being available at 17 days.

And even though it's a premium video on-demand customer, a transactional video on-demand customer, it is -- a lot of people just get an e-mail and it says available at home. They're not paying attention to when it's available, it just feels like it's at home and they're thinking it's free when it really could be $20, $25 to rent it for a couple of days. And so really the first thing that the industry needed to do and is moving away from that because that's very deleterious.

And we've seen data, this is the most interesting thing that I think, the data that is put out by the groups that do the research for the industry. Show that the propensity to buy transactional video on demand at that price really is about the same in week two through week eight.

In other words, that customer is a specific customer that is buying in week two and they'll be the same customer sitting there in week eight. And so our position as an industry has been, look. If that same customer is going to be there, you're impacting a lot of other downstream customers when you put it out there in week two.

And so if you could wait, you'll roughly the same number of transactional sales, and yet you will now increase the theatrical box office which in years to your benefit. So that seems like a win-win for us, and I think that the industry is coming around to that and realizing because they're seeing the same research that we see.

And that idea of pushing out that transactional window, as you see, has been going on. And that's, I think, very helpful. The next thing is we really need to get the time to what we call time to free, which is the time to streaming pushed out as well, because that customer is also looking.

And again, we think the trade-off, and I think the data shows the trade-off of being able to have something in a theater that does business, that catches the customer's eye, that ultimately when it shows up as a tile on your screen, you're trying to pick what you're going to watch streaming is actually a good trade-off to push it off just a little while and then again, make it a win-win for the entire ecosystem, not just for theatrical, not just for streaming, but to make the pie larger, that works to all of our benefits and that's our goal when we as an industry push for longer windows.

Okay. Thank you. And if I could just get one question in on the hotel segment. Could you maybe just talk a little bit more about the group pace for 2027 and I guess how sensitive you kind of view that being with the elevated kind of travel costs with like higher fuel costs and things like that?

Yeah, I mean, we're running ahead as we shared in the prepared remarks for next year. A lot of that group business can -- the fluctuations in those pace and bookings is tied to the calendar of events in the markets that we're in.

And what really becomes the variable is the attendance at the events. And so it's really tough to know this far out what type of impact continued high travel costs will have on participation in those events. We haven't seen events getting cancelled, but it's more how well attended are they and I just don't know that we have the visibility to make a call on that relationship for 2027.

Okay, thank you.

Drew Crum, B. Riley Securities.

Good morning, everyone, and yes, congratulations on the Brewers. Maybe to start with the theaters division, guys, just looking at 4Q, what are the kind of primary puts and takes when thinking about your performance and specifically admissions revenue relative to the industry?

I mean, so when we look at the composition of the mix of films and think about the big films in the quarter, a couple of things to keep in mind. One, here in October, the industry is up. Our primary markets actually have been impacted somewhat by really two things. One is this Brewers run has been on weekends for the home games. And so that actually will have some modest impact on our theater business while it benefits the hotel business, but it's happening in the smaller part of the quarter. So a net positive for the company, but it will impact our performance relative to the nation somewhat at least in the month of October.

On mix of films, just a couple of things stand out. Last year, we had Wicked. In the fourth quarter did very well on that film. And when I look at the big films in the quarter, this year, we've got a couple of family films in Hexed and Cat in the Hat that traditionally family content plays well in our markets. A film like Avengers, we should get our natural share on. And I think Dune tends to play a little bit better on the coast than it does in our part of the country.

So those are really the puts and takes. I think regardless, it's going to be a very robust fourth quarter box office and it looks like October up, November likely down year over year with December being up pretty meaningfully.

I'd even just add a little color if you drew second, some color on that on the October, the movie slate. Not only is October a quieter month for the industry, it generally doesn't play to our strength because you're going to get a lot more of the Oscar contenders, our film, things like that, which we do okay on, but it's not our bread and butter. So I think historically it's less impactful given where we are.

Got it. Okay. And then maybe one more. I know you guys don't provide quarterly guidance, but we can kind of back into what CapEx should be for 4Q. What are the other kind of key swing factors when thinking about your cash flow generation and your ability to grow free cash flow year on year in the fourth quarter?

Yeah, good question. On fourth quarter CapEx, there is no doubt there is a lot of with the guidance, there is a lot of CapEx to be spent in the fourth quarter. But seasonally, given the timing of our projects and when we try to get things done coming out of the summer season, there is a lot that's going to get done in the fourth quarter. So I do expect that we'll get to the range that we disclosed on CapEx.

On the rest of free cash flow, we'll see just normal seasonality in working capital with working capital, which tends to be a sort of cash as we ramp up the business at the end of the year in theaters and then there's the big unwind in the first quarter. So those are the puts and takes and then what your outlook is on earnings that will obviously fall through?

(Operator Instructions)

Mike Hickey, StoneX.

Hey, Greg. Great quarter, guys. Congrats on the Brewers. Awesome. Just curious, you guys both sort of hit on the strength of your balance sheet here and mentioned growth investments. I think you unpacked that a little bit, Greg, on the hotel side. Just sort of curious if you could dig in a little bit on what you're thinking on as much as you can on the theater side, if M&A is becoming more of a possibility, obviously, since the recovery really hasn't reset itself, but maybe it's time.

And also how you're thinking about premium amenities. We talk a lot about screens, but I know you've been testing seats as well with D-BOX and sort of curious the early learnings there and maybe some more feedback.

As it relates to start with M&A, we're starting to hear stuff is out there, but it's not much. It's just such a weird industry in terms of M&A, in terms of just when people want to sell, we got to wait for that time. It's not like there's this institutional market where people are trading assets all the time.

So we stay connected to the industry, we've been in that long enough, we pretty much know most all the players and we're active in the industry leadership and industry participation, so should stuff become available, it's stuff that we will look at and but we will remain disciplined and if it makes sense.

We'll do it, and if it doesn't, we won't, but we will continue to continue how do we get more out of our box, that's the question we ask ourselves every day, that's something we can control, we can't control M&A market as much, well, not at all.

But the -- and so you're right, D-BOX is not we're we don't have it going yet, it's just starting to get rolled out, so I can't give you any feedback on that. We've been doing ScreenX and we're pleased with our initial results from the screen. We had one for a while, we've added three more and so we are pleased with the results.

I think the feeling on ScreenX is there is a customer that really likes it, it's not for everybody, but it appeals to a -- like for me, I actually personally am a big fan of ScreenX, I love it because one of the things that's very interesting about ScreenX is that Sidewalls. And for those who don't know what it is, basically, it's a three-screen setup where you have a screen in front of you and then two screens surrounding you, one on each side.

And it goes, it's not always running. It doesn't run continuously, which is the thing that I like the most about it because my senses can only take so much assault. And so I like that there's a pause and it's used for when it's perfect. I mean, I saw the Mission Impossible biplane scene and it was just incredible to watch it sort of shoot around the theater. When you mix that with great sound, it's a great experience, I think. And so we have a customer for it and the ones that like it are very enthusiastic about it and so we our biggest question is going to be how do you price it and where else do we go with it.

And so we'll continue to figure out how do we get more out of our boxes. And it's things like that to do that. I like D-BOX, the one good thing about the D-BOX and what we like to see is that it gives you sort of a premium format inside of a standard, which gives you great showtime flexibility.

One of the challenges we face with premium formats is making sure that we offer in this discussion that we had a little bit earlier about what's the right price to charge somebody. Not every customer wants the PLF experience in fact most of our business really does come from a standard screen.

And so with showtime, the customer makes their decision to go to the movies based on showtime primarily. That is generally their first decision. And so offering the showtimes is really important in having them in a variety of formats. So when you get D-BOX, you're able to offer a premium experience at the exact same time you're offering a standard experience. And so that's our thesis and we would like to see that play out.

Does the how does the family demo, which is really strong for you guys, how does that index to D-BOX? I mean, normally for a more expensive PLF, I think families tend to avoid it. Do families adopt more, I guess, the premium seating than they would the screen?

I don't have the answer to that yet just because we don't have the experience of it yet.

Yeah, Mike, we're a few weeks into the test, but those are exactly the types of things that we're trying to understand and learn about how it will play in our particular circuit.

Last one from us, guys, when you look at the success of '26, I kind of want to ask you, Greg, what surprised you the most? But I think maybe the question is what's repeated today, whether it's a number of movies, the quality, the windows.

I don't know if there's a big down or an economic consideration, you mentioned before the use and certainly there's been a lot of momentum, but I guess as you look at sort of the attribution to the growth this year, what would you call out and what do you think is most repeatable in '27.

I think whenever you have a breakout success like this, I think the challenge is obviously the durability of it. And so that's sort of part one. And then part two, when you look at the '27 slate, and you mentioned the films, but a lot of family films, Frozen, Shrek, Minecraft, maybe Star Wars, but it really seems like a setup that you guys should index really well on, and I'm guessing just how Hollywood plays the trends. I'm sure we'll plenty of horror movies too.

Yeah, what we need is we need some comedies. We need more comedies from Hollywood here, but you're right. I think, and you're also right in that the -- and so we never know how things are going to go year to year, month to month, quarter to quarter, which is a very tough industry in that regard to predict.

But I think the most interesting thing that I think bodes well for our industry over the long time, over the long-term that is repeatable is the amount of the kids that are back. When we look at the segmentation of who wants to go to movies, [of us now] is the younger audience, which I would like the older audience back and if we can get some more dramas and comedies and to program sort of the shoulders, so to speak, not necessarily in terms of time, but sort of that idea of the demo, the shoulder demos to get them to get the adults off the couch, that would be great.

Having that long-term customer, I think a kid who is young, who started to build that habit of going to the movies and says, I love going to the movies, in the long run, that's great for the business. And again, we're seeing this data that I talk about that we've been exposed to that we see.

We saw the -- we usually -- we've seen over time this index of do you want to see this question that they ask in the survey, do you want to see a movie at home? Where do you prefer a movie in a theater or at home? And it, after the pandemic, it flipped in favor of at home, but it started to come back.

And this year they showed, this last survey they showed us to it in cohorts and what they showed us is the kids, their propensity to see movies in the theater versus seeing the home has flipped back to the old relationship where the theater was preferred over the home. I think that is really comforting, great data that should have some durability over time.

Will it have its periods of ups and downs over time? Sure, of course, it will depend on the product, the quality of the product, who it's aimed at, who it appeals to, but seeing that propensity, that desire to go at a young age is, I think, very exciting for us.

And then I guess I was on the '27 slate, Greg, I mean, looks pretty good. You must be pretty excited just given the mix of film.

Yeah, I always wait to see what shows up. And someone says, what are you looking for? What am I most looking forward to? It's whatever is the big surprise. And there will be a big surprise. I mean, just think about the surprise of the last month with the Elizabeth Holmes movie, where did that come? All of a sudden, everyone's supposed to see a three hour documentary. Great. I'm looking forward to seeing it.

I think, Mike, just on '27, I mean, I think you're right to point out as it relates to our geographies and the films that play well, '27 looks more favorable and we're encouraged by that. And so we think we're well positioned.

All right. Thanks, guys.

Good luck. At this time, it appears there are no other questions. I'd like to turn the call back over to Mr. Paris for any additional or closing comments.

All right. Well, we'd like to thank you once again for joining us today. We look forward to talking to you next in late February when we release our fiscal 2026 fourth quarter results. Until then, thank you and have a good day.

This concludes today's call. Thank you for attending. You may now disconnect.